The Rise and Fall of Saddle Finance: From High Expectations to Liquidation End

Saddle Finance was once seen as a strong competitor to Curve, having raised a total of $11.8 million from several well-known investment institutions during two rounds of financing in 2021. However, currently, Saddle Finance's total locked value (TVL) is only $3.68 million, and the market value of its governance token $SDL has fallen to $917,000. Recently, the Saddle community even proposed a plan to shut down operations and liquidate funds. Let's take a look back at the development history of Saddle Finance to see how it has come to this point from being a highly regarded project.

Initial Stage: Top Investment and Airdrop Expectations

One of the main differences between Saddle and Curve is that it uses Solidity instead of the Vyper programming language, which protects Saddle from the impact of the recent Curve hacking incident. In January 2021, Saddle announced that it had raised $4.3 million in seed funding, with investments from several well-known venture capital firms. Before its official launch, Saddle also passed audits from multiple security agencies.

Although Saddle did not issue governance tokens initially, the market generally expects it to release tokens. This combination of top-tier investment + security audits + airdrop expectations has brought high attention to Saddle. However, excessive expectations have also led to some problems. In the early days of its launch, a large influx of liquidity providers caused serious price imbalances in the asset pool, resulting in some users suffering permanent losses.

In November 2021, Saddle officially announced the issuance of governance tokens and the launch of liquidity mining rewards, planning to airdrop 15% of the total tokens to users. This further boosted the project's popularity.

###遭遇重创: Hacker attacks and market turbulence

On April 30, 2022, Saddle's sUSDv2 pool was hacked, resulting in a loss of approximately $11 million. Although $3.8 million was returned by white hat hackers, this incident severely undermined user confidence. According to data from DeFiLlama, Saddle's TVL plummeted from $280 million before the attack to $120 million.

Immediately after, the market turmoil triggered by the collapse of UST in May 2022 dealt another blow to Saddle, causing its TVL to further decline to $70 million, and it has not been able to recover since.

Conclusion: Liquidation Proposal

Recently, the Saddle community proposed to dissolve the community and liquidate the remaining assets. The main reasons include:

1. The core team plans to stop working by the end of September 2023.
2. The protocol may have potential security risks.
3. The value of the protocol treasury has exceeded the market value of the token, it is recommended to allocate the received $ARB airdrop to token holders.
4. Continuing operations face long-term coordination and management difficulties.

The proposal suggests that all remaining DAO funds be liquidated into $ARB and distributed according to the proportion of $SDL and veSDL held. It is estimated that each $SDL could receive approximately $0.0026 worth of $ARB, slightly higher than the current market price of $SDL.

Although most community members support the liquidation, there are still some disputes regarding the specific execution details, such as the weight multiple of veSDL and the choice of snapshot time.

This case once again confirms that even with top-tier investment and strong technology, DeFi projects can fail due to various factors. For the entire industry, Saddle's experience is undoubtedly a lesson worth reflecting on.